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Comment by davidajackson | Hacker News Reader

> Yes, Product C is slightly cheaper than the most expensive option, but it offers less storage than any of the options.

Why would a business want wrong looking pricing on their pricing page, "decoy"s aside? Seems that would deter people more. Makes the business seem like it doesn't have its stuff together. Would you trust a company that seems like it can't do simple math? I think the author may be getting at something here--perhaps adding a third, unrelated or irrelevant option drives more conversions, but nonsensical pricing doesn't seem like the way to do that.

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It would make more sense to have prices $40, $50, $60, where the $50 plan is always on sale for $30. Then, you effectively have a $30 and $60 plan, and the $40 is a decoy to make $30 seem like great value.

I designed a quick example below. That being said, I have no experience with pricing strategies, and I feel like this example is missing out on users and businesses that would be willing to spend $100.

https://i.imgur.com/vzaoy8q.jpg

$29 would likely work a whole lot better than $30

$28 would work better than $29... the main point still holds.

you have no evidence for that claim... the '9' effect has been studied extensively

So, $39 would work better than $28?

Was this comment really worth exposing the fact that you don't understand why nearly every store in America prices with 9's?

But since you asked... lowering the price by $11 will require 28% more unit sales to cover the difference. Normally 28% more units would increase COGS, resulting in less profit on equivalent sales, requiring even larger unit growth, but we're talking about software here so let's ignore that. Regardless, I couldn't tell you which works better without some more data.

I will bet you, however, that $39 will outperform $40 in total revenue and profit.

I think you missed my point. Whether it was 30 or 29, the idea still holds, and the idea was not optimizing to the single dollar level.

No, I didn't. If you're going to optimize the article's example, why stop halfway?

The article also suggests you should start with the post expensive option (60 in your case)

Yeah. Their first example of the decoy is not the best, imho. The Economist example is much better.

IIRC, around the time the Economist did this change, their annual print price increased. I imagine that this change made the transition much smoother.

There's a known cognitive bias that kicks in with 3 items, realtors for example will exploit this. They'll show 2 similar houses and 1 different house, people will end up comparing the two similar houses more, and choose the one that's more of a bargain.

The examples for the decoy effect are absolutely awful.

Usually what is done is that you choose a minimum price lets say an ISP offers 25mbit for $20, 50mbit for $35 and 100mbit for $50. The 25mbit plan is obviously poor value but at the same time it is still the cheapest option. Some customers truly don't need more than 25mbit but if you are looking to spend more than $20 then you are more likely to go straight for 100mbit than for 50mbit.

Agreed. I have this on a pricing page out of laziness after adding a new option (it's still there, actually), where one option is strictly better than another, and all it leads to is e-mails asking what's special about the old option that makes it more expensive.

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